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Income gaps widened in Pennsylvania between the late 1990s and the mid-2000s when earnings for low-income families dropped as the income of the wealthiest continued to increase, according to a new study by the Center on Budget and Policy Priorities and the Economic Policy Institute.

This “lost decade” is part of a longer-term movement toward greater income inequality in the Commonwealth. Since the late 1970s, income gaps have grown not only between low- and high-income households but also between middle- and high-income households.

The report, Pulling Apart: A State-by-State Analysis of Income Trends, released in Pennsylvania in coordination with the Keystone Research Center and Pennsylvania Budget and Policy Center, finds that moderate- and low-income Pennsylvania families did not share in the most recent economic expansion:

Between the late 1990s and mid-2000s, the annual incomes of the richest fifth of Pennsylvania households grew by 7.2 percent ($11,190), while those of the poorest fifth fell by 7.9 percent ($1,907).

The income gap between the very richest households and low-income households increased even more dramatically. The incomes of the richest 5 percent of Pennsylvanians grew by 11.2 percent ($27,387) from the late 1990s to the mid-2000s.

Income inequality also grew between middle- and high-income households in Pennsylvania from the late 1990s to the mid-2000s. Middle-income Pennsylvania households saw their incomes rise by only 1.9 percent ($1,169) — compared to 7.2 percent for the richest fifth and 11.2 percent for the richest 5 percent of households.

Incomes grew much faster among the wealthy than low-income households. In the late 1990s, the income of the richest fifth of Pennsylvania households was 6.4 times that of the lowest-income fifth, and by the mid-2000s it was 7.4 times larger. The top 5 percent of households had 10.1 times the income of the bottom fifth in the late 1990s, and by the mid-2000s it was 12.2 times larger.

Nationwide, incomes fell by close to 6 percent among the bottom fifth of households, on average, while rising by 8.6 percent among the top fifth between the late 1990s and mid-2000s. Incomes grew even faster — 14 percent — among the top 5 percent of households.

Learn More

Read a press release jointly released by the Pennsylvania Budget and Policy Center and the Keystone Research Center in coordination with the Center on Budget and Policy Priorities and the Economic Policy Institute.